The Gold Bug

The Gold Bug is dedicated to principles of free markets, private property and sound money as best put forward by Ludwig von Mises and the Austrian School.
The publisher, Scott Silva also publishes an investment newsletter on gold and gold stocks called The Gold Speculator www.thegoldspeculatorllc.com

Wednesday, March 5, 2014

The Bitcoin
fiasco shows the difference between fiat money, virtual money and the only real
money, namely gold. Mt. Gox, the Tokyo private exchange for Bitcoins, filed for
bankruptcy last Friday, after the owner shut down its website. Mt Gox account
holders, including Mt Gox, lost $425 Million when the virtual exchange went
dark. Mr. Gox officials claim over 800,000 Bitcoins went missing from user and
company accounts, forcing the company into bankruptcy. Several authorities are
investigating the incident.

Mt. Gox is just
one of several private exchanges that sprouted up in response to demand for the
virtual currency. The value of Bitcoins jumped exponentially since its 2009
start, topping $1200 in December. Bitcoins are trading at $600 or so now.

Bitcoin is
virtual, cryptographic money which allows people to transact on a peer-to-peer
basis over a network. Bitcoin owners can transact with merchants that have
decided to accept Bitcoin cryptocurrency. Bitcoin transactions fall outside
traditional banks and banking regulations. Bitcoin.org is the open source
foundation that maintains the Bitcoin standard. Private exchanges and
application providers allow individuals and corporations and other users to
discover the current market price for a Bitcoin in most traditional currencies.

As we know from
Aristotle, money is worth precisely what people are willing to exchange for it.
Users believe Bitcoins have value, which is why Bitcoins enjoy a higher
exchange value now than in 2009. One Bitcoin feature that is attractive is it
carries no or low fees for any transaction. As more and more merchants accept
Bitcoin payments, demand increases for Bitcoin money, and its exchange value
increases. It’s the fundamental law of supply and demand in play.

As we also know
from Aristotle, true money is defined by the four characteristics:

`1. Money must
be durable. Money must stand the test of time and the elements.

2. Money must
be portable. Money (coin currency) holds it “worth” relative to it

weight
and size

3. Money must be divisible. Money should be relatively easy to separate
and re-combine without affecting its
fundamental characteristics.

4. Money
must have intrinsic value. The value of money should be independent of any
other object and contained in the money itself.

By these
measures, it could be argued that Bitcoin meets Aristotle’s divisibility and
portability criteria, but fail to meet the durability, and intrinsic value
criteria. The Mt Gox fiasco shows Bitcoins to be vulnerable to internet
security threats and hacking. Therefore, Bitcoins are not very durable. By
their very nature, Bitcoins have zero intrinsic value. A crypto-coin is only as
valuable as its security code. Who would assign value to a Bitcoin account that
could be accessed by anyone without even a password?

So why are
Bitcoins so attractive? A major draw is the freedom to transact without a bank
or government regulation. Unlike fiat currencies, Bitcoins are not subject to
devaluation by central banks that can add to the money supply.Bitcoins are not subject to the costs and
risks of banking regulation. For example, Bitcoins are not subject to factional
banking reserve requirements. Bitcoin transactions do not require any
traditional bank, or bank fees.

Last week, Fed
Chair Janet Yellen, in a response to a Senate Banking committee member’s
question about Bitcoin regulation, was happy to say the Fed has no regulatory
authority, responsibility or role in any Bitcoin transaction. Her answer seemed
to shock Senator Joe Manchin (D-W Va) who apparently wants to slap some new
regulation on the virtual currency.

Whatever the fate of
Bitcoin, its emergence and recent difficulties demonstrate why gold is the only
true money. Gold meets every one of the Aristoltilian requirements for true
money, the most important being intrinsic value. Bitcoins and gold share one
important feature: neither is directly subject to the whims of the central
bank. The Fed can print trillions in new paper money as it attempts (and fails)
to stimulate the economy. Each Dollar the Fed prints debases those Dollars that
are outstanding.

But Bitcoins and
gold behave differently as the Dollar is debased by the Fed’s monetary actions.
Bitcoin prices (green line) appear closely correlated to moves in the Dollar
(blue line). Gold (candlesticks) tends to move inversely to the Dollar.

This means that
gold tends to hold its value better than Bitcoin as the Dollar loses value.

Gold has
survived thousands of years as the world’s only true money. While there are
costs for its safekeeping, owning gold is the prudent way to protect wealth
against the vagaries of fiat currency and government intervention.

Responsible citizens and prudent investors protect
themselves and their wealth against the ambitions of over-reaching government
authority and debasement of the currency by owning gold. Gold is honest money. Investors from around the world benefit from timely
market analysis on gold and silver and portfolio recommendations contained in The
Gold Speculatorinvestment newsletter, which is based on the principles
of free markets, private property, sound money and Austrian School economics.

The question for you to consider is how are you going to
protect yourself from the vagaries of the fiat money and economic
uncertainty?We publish The Gold Speculator to help people make
better decisions about their money. Our Model Conservative Portfolio has
outperformed the DJIA and the S&P 500 by more than 3:1 over the last
several years.Follow @TheGoldSpec
Subscribe at our web site www.thegoldspeculatorllc.comwith credit card or PayPal ($300/yr) or by
sending your check for $290 ($10 cash discount) The Gold Speculator, 614 Nashua
St. #142 Milford, NH 03055

Tuesday, August 13, 2013

Gold is signaling its next move up in its long term secular bull market.
That’s good news for the miners, which are also signaling “Buy, Buy, Buy”. For
gold bugs, there is always a good reason to buy gold. As it turns out, now may
the opportune time to buy as these bargain prices may not be available for
long.

Technical analysts know that price action and trading volume over time
establish recognizable chart patterns. Valid chart patterns are reliable
predictors of future price levels. Because historical data show that the most
reliable patterns are accurate about 70% of the time, many professional traders
include technical analysis when making investment decisions. Some successful
traders rely almost exclusively on the “technicals”.

As subscribers to The Gold
Speculator know, on July 11th and July 20th, we
issued buy recommendations on gold, silver and selected gold and silver stocks.
Today we are gratified to see gold and silver climbing above our identified
breakout levels, on their way to higher targets. Also today, respected Wall
Street analysts upgraded their opinions of some gold and silver stocks we own
in our Model Conservative Portfolio. Welcome aboard, Macquarie!

Here is the analysis that backed our bullish call on gold and gold stocks
of last week:

“Gold is trading in a
consolidation manner, creating a bullish ascending triangle pattern from the
July low. The breakout to the target price of 1427 could happen with a close
above 1303 (top trend line level) on volume.

The
Ichimoku indicators are bearish at the moment, but these signals are tending
toward a bullish bias. For instance, the Tenkan Sen is in bearish territory
below the Kijun Sen, but it has moved up toward a bullish cross. Likewise, the
Chikou Span is currently in bearish territory, but may emerge above price
action by moving sideways or slightly higher over the next several trading
sessions. Support is now 1265.90 with resistance at 1337.”

Tuesday’s chart shows the breakout from the bullish ascending
triangle pattern. The close above the top trend line is the most significant
signal. Also important, but difficult to see on this chart is the bullish cross
of the Kijun Sen by the Tenkan Sen from below. Such a cross signals the
beginning of a new trend. The Ichimoku indicators will confirm the bullish
trend is complete when the three remaining Ichimoku indicators turn bullish,
which each appears to be doing. Price action needs to break through the cloud,
which can happen with even sideways trading from here. The projected cloud
needs to “flip” from bearish to bullish (the cloud is already narrowing prior
to such a “kumo flip”). And finally, the Chikou Span (green trace) needs to
move above price action, where it appears to be headed. The separate MACD
indicator is also bullish. We have found such MACD crosses useful in
identifying trend reversals earlier than the Ichimoku indicators. We have
referred to these MACD crosses as trade “triggers”.

The bullish ascending triangle was
formed by price action beginning in early July. The measured move brings a
target price of 1427 for spot gold. If price action on the way up prints higher
highs and higher lows, then a price action may form a larger, more powerful
ascending triangle pattern dating back to mid-June. This is not uncommon in a
strong uptrend. We will be watching for that happy case to play out.

Last week, we recommended
clients buy selected gold and silver mining stocks. We had seen similar bullish
chart patterns develop for our recommended names. The AMEX Gold Bugs Index
(HUI) has some bullish features, although not as well defined as those of
selected issues. The HUI gapped up on Monday’s open and continued higher in
trading Tuesday. In general, miners are catching the bid. That’s good news for
gold bugs everywhere.

The miners have been neglected
by investors for a while. Now their stock prices are at very attractive levels
for value investors. Mining stocks tend to be more volatile than the price of
the underlying metal, so the mining stocks may climb faster in an uptrend. We
believe that to be the case for several gold and silver producers right now.

The planets are lining up for
the next leg up in the long term bull market for gold and gold stocks. Don’t
miss your golden opportunity to profit.

Responsible citizens and prudent
investors protect themselves and their wealth against the ambitions of
over-reaching government authority and debasement of the currency by owning
gold. Gold is honest money. Investors from around
the world benefit from timely market analysis on gold and silver and portfolio
recommendations contained in The Gold Speculatorinvestment
newsletter, which is based on the principles of free markets, private property,
sound money and Austrian School economics.

The question for you to consider is how are you going to
protect yourself from the vagaries of the fiat money and economic
uncertainty?We publish The Gold Speculator to help people make
better decisions about their money. Our Model Conservative Portfolio has
outperformed the DJIA and the S&P 500 by more than 3:1 over the last
several years.Follow @TheGoldSpec
Subscribe at our web site www.thegoldspeculatorllc.comwith credit card or PayPal ($300/yr) or by
sending your check for $290 ($10 cash discount) The Gold Speculator, 614 Nashua
St. #142 Milford, NH 03055

Sunday, March 3, 2013

Within the last two weeks, the price of gold dropped sharply to levels
not seen since July 2012 and nearly as low as the lows of December 2011. Spot
gold lost 112 points in the ten days from February 11th to February
21st, a 6.7% slide.

Just prior to the selloff, many analysts identified an onerous chart
pattern as well as a popular technical indicator that appeared to be turning
bearish enough to reverse gold’s long standing bullish trend. The worrisome
chart pattern is the bearish triple top. The indicator that anxious traders
carefully watched for proof of a trend reversal to the downside is aptly named
the “Death Cross”.

The price of gold did fall in those ten days. But, did the bearish chart
pattern predict a fall in the price of gold, or did traders create the patterns
that confirmed the decline?

A look at the market conditions surrounding the sudden selloff in gold
shows the bearish chart pattern actually failed, and traders may have had more
to do with the selloff than many observers might think.

First let’s examine the bearish triple top pattern, also known as the
triple top reversal pattern.

We know the triple top chart pattern can lead to some powerful
downdrafts, especially if the successive tops are separated greatly from
support levels and the tops are spread over a long period of time. The triple
top pattern occurs when price action meets resistance, falls, and retests
resistance then falls, twice more. The
resistance level of gold recently is clearly established at 1805. The support
level is also clearly evident; it appears as the bottom of a trading range. The
support level is 1527. The three tops and the support level are evident in the
daily chart for gold below. The depth of the trading range between resistance
and support in this pattern is 278 points. A reversal occurs when price drops
below support with relatively high volume.

But there are two elements missing in the bearish triple top pattern that
are required to make the pattern valid. First and most obvious is the fact that
price action has not dropped below the support level of 1527, although the drop
came close. On February 19th, gold traded as low as 1554.30 but
closed at 1559.60, quite a bit higher than the support level.Price action has yet to close below the
support level of the pattern.Second is
a lack of confirming higher relative volume, which may be moot without the
breakout. Nevertheless, there is no sign of capitulation, or massive selling
pressure. The conclusion is the triple top reversal in gold has not occurred.

But what did occur is a sudden selloff. What caused it?

The answer, in my opinion, is the power of the self-fulfilling prophesy.
Traders believed that a selloff was coming and so they sold. Selling begot more
selling, which continued until there were no sellers left, leaving the buyers
in control. What did the sellers see coming for gold? It was the terrifying
“Death Cross”, the bearish signal sent when the 50 day moving average drops
below the 200 day moving average. It is highlighted by the circle on the chart
below. Traders could see steady convergence in the averages days before the
selloff. Then, just before the cross, sellers sold hoping to get ahead of the
decline. And by selling, more sellers were alerted, all driving the bid lower. The prophesy of a selloff became a selloff. It
is a reliable phenomenon. Traders with
long positions set their stops at such junctions. And the shorts kick in at
these points as well, hoping the decline will be deep. These sell long and buy
short orders are made by humans and machines. Nowadays it’s difficult to tell
which moves the market more.

The bullish trend for gold remains intact. We can make this statement
because technical support has not been breached. In fact, the recent decline
was healthy for gold. It has allowed some profit taking, and new buyers to
enter at bargain prices. The major trend remains bullish for gold. Tuesday,
Chairman Bernanke dispelled any rumors of gold’s demise, when he affirmed his
commitment to continued Quantitative Easing, until such time as US unemployment
shrinks to 6.5%.The Chairman is
referring to the administration’s favorite measure for the out or work. The
true unemployment rate, the U-6 measure, is so much higher that it is deemed
politically incorrect (a lofty 14.6% for January). At that rate of job growth
over the last four years, the Fed will be buying bonds until 2035!

There is no doubt that more QE is good for gold, and evidently, stocks.
QE is better for gold because gold cannot disappoint analysts and traders with
lower quarterly earnings, which is one trap the ultra-easy monetary policy
springs for stock market investors. Stock yields appear attractive compared to
negative real interest rate fixed income assets. The Fed has distorted not only
the yield curve but also the risk/return balance. This has pushed investors
into stocks and in the stock indices higher. We are seeing companies manage
earnings well while missing top line revenue expectations.This is not a sustainable growth model for
equities.The model collapses as interest
rates rise, and margins are squeezed further. Lower sales revenues are a
symptom of recession in Europe, a slowdown in China and continued sluggishness
in the US. QE Infinity is artificially pumping up stock prices. The forward PE
for the S&P 500 Index, for example, is 17.90 compared to 15.78 a year ago.
If there were true earnings growth, which only can be sustained by true revenue
growth, the forward PE would be much higher.Then, there is the $ 2 Trillion cash trove sitting on company balance
sheets here and in overseas tax havens. Companies are not investing in growth.
They would rather buy back shares and sit on cash.

So, how have investors fared in stocks vs gold during the time of QE?
Since Chairman Ben and the Treasury began their ultra-easy monetary regime,
gold has gained dramatically compared to

the broad stock index (SPX).

No one can predict the future, including Ben Bernanke. But he seems
intent on continuing his dovish ways. And as he does, those who own gold will
be better off for it.

Responsible citizens and prudent investors protect
themselves and their wealth against the ambitions of over-reaching government
authority and debasement of the currency by owning gold. Gold is honest money. Investors from around the world benefit from timely
market analysis on gold and silver and portfolio recommendations contained in The
Gold Speculatorinvestment newsletter, which is based on the principles
of free markets, private property, sound money and Austrian School economics.

The question for you to consider is how are you going to
protect yourself from the vagaries of the fiat money and economic
uncertainty?We publish The Gold Speculator to help people make
better decisions about their money. Our Model Conservative Portfolio has
outperformed the DJIA and the S&P 500 by more than 3:1 over the last
several years.Follow @TheGoldSpec
Subscribe at our web site www.thegoldspeculatorllc.comwith credit card or PayPal ($300/yr) or by
sending your check for $290 ($10 cash discount) The Gold Speculator, 614 Nashua
St. #142 Milford, NH 03055

Wednesday, February 13, 2013

Stocks are catching the bid again, trading higher. The S&P 500 has
topped 1500, a level not seen since 2007. The Dow has also recovered from its
lows to pre-meltdown levels, above 14,000. Stock traders shrugged off fiscal
cliff fears, to extend the rally into the new year. Small investors are now
joining the professional buyers, who have viewed stocks as undervalued assets
for over a year. They are cashing in their bonds and emptying the mattresses to
put money into stocks.

What has propelled US equity markets? The answer may surprise you.

We’ll we know the presidential election has not pushed the stock market
higher. To the contrary, stocks tumbled when the president was re-elected.
Stocks had rallied with pre-election hopes of a new, pro-growth occupant in the
Oval Office. But alas, that hope vanished when the final votes were tallied.
The president could have won over traders by announcing a change in his
economic policy to start his second term, but he didn’t, and his plan has
consequences. More on that later.

So if the president’s economic policy did not stimulate the current
rally, what did? The answer lies in a fundamental principle of free-market economics
(and everyday life), namely, substitution. In his 1978 text Microeconomic Theory, Nicholson defines substitute
goods as “those goods which, as a result of changed conditions, may replace
each other in use (or consumption).” Investors treat risk-free yield as a
desirable economic good. The world gold standard risk-free instrument has been
the US Treasury bond, or note. Buyers of AAA-rated

Companies could go bankrupt,
products could fall out of favor, or stock prices could fall for any number of
reasons. Throughout history, investors searching for yield have committed
capital both to stocks and bonds, overweighting their portfolios in one or the
other asset class according to their risk profile and investment objective.

But that time-tested strategy
not longer holds. That’s because the Federal Reserve has changed the game. In
his reverent adherence to Keynesian stimuli, Chairman Bernanke has taken away
risk –free yield (or pushed it out to 30 year maturities), by instituting his
Zero Interest Rate Policy (ZIRP). This massive credit intervention flattens the
yield curve and drives real returns on medium term Treasury instruments (and
CD’s) into negative territory. Investors naturally seek other instruments. They
look for substitute goods. Many select high-yield dividend stocks, not for
their equity value, but for their dividend income. When the buyers come in,
stock prices rise.

Many investors have been holding
cash since the great financial meltdown. They have lost capital while they held
because the Dollar has lost purchasing power since then (and will continue to
lose value). This too, is a result of the Federal Reserve’s massive credit
intervention.

Big Ben loves to print money.
But we know that Gresham’s Law still holds. The Fed debases and devalues the
currency each month by printing more money out of thin air in its $1 Trillion/
year Quantitative Easing program.

That’s not all QE is doing. QE is pumping up stocks with hot air. The
Fed’s ultra-easy money regime keeps margin rates low, which spurs stocks, and
also keeps borrowing rates low for corporate capital investment. Because of
investor substitution, incoming stock buyers benefit from low margin rates. But
companies are not rushing to but capital equipment at low interest rates.
Instead, companies are sitting on roughly $2 Trillion in cash here, and keeping
another $2 Trillion offshore and out of reach of Federal taxes. Some companies
can think of nothing better to do with their cash than buy back shares. Stock
buybacks tend to push stock prices higher (less stock outstanding, higher P/E
for the same earnings), but they are a tremendous waste of capital.

In general, US companies are not expanding. They certainly are not
hiring. No amount of Federal Reserve QE will force them to do either. Simply
put, the Fed cannot create aggregate demand. This is heresy, of course, to the
Chairman and the president’s economic team. But the reason that the president’s
entire economic team has deserted him is because their Keynesian policies have
utterly failed. TARP was a failure. The GM bailout was illegal. The $800
Billion Stimulus Package failed. Cash of Clunkers failed. Mortgage modification
failed. The Payroll tax holiday failed. GDP is hovering at low levels, and
dipped into negative territory last quarter. Unemployment has not declined
since 2009, despite the administration’s spin. It remains stubbornly at 14%
(U-6 measure), a level not seen since the 1930’s. We simply cannot print money,
tax, spend and regulate our way to prosperity.

So should investors join the buying spree in stocks? Well, the speculator and the aggressive
investor may find some gains in equities now. We have been realizing good
profits each week in our Model Aggressive Portfolio (MAP), where we focus on
near term trade (weekly) setups in stocks, options and futures. In MAP, we have
been focused on stocks since November 2011 and our recommendations have made
money each week. But the market holds risks for more conservative investors
that enter at these levels. That’s because earnings, the mother’s milk of
stocks, are beginning to top out for many large cap companies. We are seeing
companies meet or beat 4th quarter earnings expectations and miss
revenue expectations. Revenue growth is essential to earnings growth. Many
companies are guiding analysts lower going forward. These companies are
reflecting lower global demand and the realities of continued recession in
Europe, a slowdown in China and slowing demand in the US.

Slowing, low demand in the US won’t be reversed by raising taxes. But
raising taxes yet again is exactly what the president intends to do. What is
puzzling about the president’s tax obsession is history shows cutting taxes
stimulates the economy. The economy jumps when consumers have more
discretionary income to spend. What’s more, the Federal government gets more
revenue when marginal tax rates are reduced. This happened as a result of the
Kennedy tax cuts, the Reagan tax cuts, the Clinton tax cuts and the Bush tax
cuts. Reducing federal regulation also stimulates the economy, as we saw most
prominently in the Reagan years, the longest period of prosperity and economic
growth in our time.

The technical indicators are signaling stocks are reaching major
resistance. For the S&P 500 index (SPX), a good measure of the broad equity
market, prices has climbed to just over 1500, a key resistance level. Price
action of the SPX has formed a bullish inverted head-and-shoulders pattern on
the daily charts with a neckline at 1458. The measured move on a bullish
breakout above the neckline is 105, which brings a target level of 1563. The
SPX made its breakout of the bullish pattern on January 10th, and
has been climbing steadily since. Yesterday, the SPX closed at 1522.29.

This move up can also be seen in the Fibonacci extensions of the previous
run up (June -Sept 2012) and pullback (Sept-Election swoon of November 2012). Since
the November lows, price action has powered up to the 50% Fib (1448) at circle
#1 on the chart below, then fell back to just above the 23.6% Fibo (1398 at
circle #2), and quickly jumped past the 38.2% Fibo and surged right up to the
61.8 Fibo at 1472 (circle #3). After
five days of consolidation at the 61.8 Fib, the SPX climbed steadily to the
78.6% Fibo at 1507 (circle #4) and appears to be headed higher still.

It is gratifying to see separate technical analyses in such lockstep
agreement.

The speculator or aggressive investor that followed our Model Aggressive
Portfolio (MAP) Recommendations has done very well with selected stocks, stock
options and futures contracts over the last several months. Weekly returns have
ranged from 30% to 77%. What choices are available to the conservative investor
in today’s investment environment?

The case for choosing gold today is as strong as it has ever been. It can
be made efficiently in the form of a parliamentary inquiry, so often used in my
own sovereign state of New Hampshire’s General Court:

If you know, as I know, that
stocks are full of Fed hot air, and the Fed has fenced off reasonable yields in
fixed income instruments by intervening in the credit markets, and,

If you know, as I know, that corporate
bonds offer yields only at a significant risk of default, and,

If you know, as I know, that
the Federal Reserve is continuing to print money under its Quantitative Easing program, and has
stated it will not stop until the unemployment rate is lower than 6.5%, and

If you know, as I know, that
unlimited QE has no effect on the unemployment rate, and that

QE debases the currency and its purchasing power, and

If you know, as I know, that
gold increases in value as the Dollar decreases in value, and that gold is
recognized as the ultimate global currency,

Would you not agree with me
that owning gold today will protect your wealth against the ravishing of fiat
currency and tyrannical federal overreach?

That’s right. The answer for conservative investors is gold. In fact,
aggressive investors should also own some gold to diversify their portfolios. Here’s
why any investor should own gold now.

The great bull market for gold is continuing. The fundamentals are in
force to push gold prices higher, and the technical analysis supports higher
gold prices from here.

First, the fundamental case. It all boils down to central bank policy.
The Fed, the ECB and BOJ are all maintaining accommodative monetary policies.
That is, they will keep interest rates artificially low and continue to add
liquidity by various forms of Quantitative Easing. QE itself debases the
currency and drives commodity prices higher.
Loss of confidence in the Dollar, the world’s reserve currency, is also
reflected in the price of gold. Political instability in sensitive regions of
the world affects the price of gold (and oil). We are seeing the war premium
boosting oil prices as tensions rise over nuclear weapons development in Iran
and North Korea. Even central banks are buying gold. That’s because unlike fiat
currency, gold has intrinsic value. Gold is recognized as the ultimate global
currency and store of value.

Second, the technical case. QE is
weakening the Dollar. As the Dollar weakens the price of gold increases. The
traditional inverse relationship between the Dollar and gold is present in
today’s market. Global QE and US economic policy is keeping the Dollar weak.
The weak Dollar supports higher commodity prices in general and higher gold
prices in particular.

We can see this dynamic play out in the chart of gold vs Dollar below.
Technical indicators on the daily and weekly basis charts are bearish for the
Dollar. On the weekly basis charts, resistance is now 80.74 with support at
77.44. The Dollar is headed lower form here. A move down to the 78 level would
command a gold price of 1800, a key resistance level.

What would cause the gold price to drop significantly? Well, if the Federal Reserve were to cease
buying bonds (QE), the price of gold would drop. But Chairman Ben has
reiterated his commitment to buying bonds at the rate of $85 Billion per month
until unemployment is reduced to 6.5%. The January 2013 unemployment rate is
14.4% and the current regime has no pro-growth economic plan. The price of gold
would drop if peace broke out in the Middle East and Iran, North Korea and
China dismantled their nuclear weapons. Recent events in these tinderbox areas
demonstrate there’s not much chance of that happening, particularly when the US
is reducing its military strength to the point it can no longer fight in two
theaters of operation at once. Gold
would fall if real estate became a safe investment asset again. But it will
take 10 years to work through the housing overhang of 5 million foreclosed
properties that is weighing down home prices. And gold would fall, as it did in
the Reagan years, if pro-growth tax reform, and a plan to balance the budget
within ten years, which would include entitlement reform, were adopted now. As
we saw in yesterday’s State of the Union address, the president is campaigning
for higher taxes, more spending and more Federal regulation. No pro-growth
agenda there.

So now is a good time to buy and hold gold. Buy gold to protect your
wealth against the corrosive effect of ultra-easy monetary policy. Buy gold to
maintain a store of value that is recognized universally. Buy gold to diversify
your investment portfolio. Buy gold for peace of mind in uncertain times. Buy
gold to secure yourself and your family.

Responsible citizens and prudent investors protect
themselves and their wealth against the ambitions of over-reaching government
authority and debasement of the currency by owning gold. Gold is honest money. Investors from around the world benefit from timely
market analysis on gold and silver and portfolio recommendations contained in The
Gold Speculatorinvestment newsletter, which is based on the principles
of free markets, private property, sound money and Austrian School economics.

The question for you to consider is how are you going to
protect yourself from the vagaries of the fiat money and economic uncertainty? We publish The Gold Speculator to help people make better decisions about
their money. Our Model Conservative Portfolio has outperformed the DJIA and the
S&P 500 by more than 3:1 over the last several years.Follow @TheGoldSpec
Subscribe at our web site www.thegoldspeculatorllc.com with credit card or PayPal ($300/yr) or by
sending your check for $290 ($10 cash discount) The Gold Speculator, 614 Nashua
St. #142 Milford, NH 03055